Davola Inc. has the following financial information: Debt: Dovola sold bond at par that mature in 15 years. These bonds pay a semi-annual coupon payment with a 7.9% coupon rate. Preferred Stock: Pays a 9.05% preferred dividend with a par of $100 and is currently selling for $85. Equity: Davola's common stock currently sells for $27 and grows at a constant rate of 5%. Davola just paid a $1.95 dividend to their shareholders. . Dovola assumes a 25% tax rate for corporate finance planning purposes. Davola's business plan for next year projects net income of $340,000, half of which will be retained. Dovola Inc. pays flotation costs of 10% on all new stock issues. Dovola's capital structure is 40% debt, 15% preferred stock and 45% common equity. 1. What is Dovola's cost of debt, cost of preferred stock and cost of common equity, assuming they have to issue new common stock? 2. Calculate Dovola's WACC after the break in retained earnings. In other words, calculate the WACC assuming that Dovola will have to issue new stock to fund the equity portion of their capital budget